The final 2024 auction for Regional Greenhouse Gas Initiative carbon allowances, held December 4, broke the recent pattern and produced a noticeably lower clearing price. The price of $20.05 per ton of emitted carbon dioxide is still higher than was ever charged to Virginia electricity producers during Virginia’s three years in the program.

The December 2024 auction price was 38% above the amount generators had to pay a year ago but is down from the 2024 peak of $25.75 per ton in September. A Floyd County Circuit Court judge has ruled that the Youngkin Administration erred in removing Virginia from the RGGI regime a year ago, and only an Act of the Assembly could accomplish that, but an appeal is likely. Virginia may or may not be back in the auction business for 2025, but if it is, expect revenue to the state of at least $400 million per annum. 

The money paid out by the energy generators ends up being charged to energy customers, one way or another. The largest buyer of RGGI carbon allowances in Virginia has been Dominion Energy Virginia, which simply passed the cost along dollar for dollar to customers. RGGI is simply a carbon tax. Just like the carbon tax in Europe, but there the tax hits all forms of hydrocarbon energy, not just electricity. The European Union carbon tax is also three times as high as the RGGI tax, after converting euros to dollars. If Democrats have their way, Virginia will catch up. 

The background information on Wednesday’s RGGI auction does not list Dominion or Appalachian Power Company among the bidders for new allowances. Old Dominion Electric Cooperative, part owner of a major coal plant in southern Virginia, was listed as a registered bidder but what it may have bought is not reported.  

December was also supposed to see the next capacity auction for the load serving utilities in the PJM Interconnection Region, which has some (but only some) overlap with the RGGI states. That auction has been postponed to next summer. The last PJM auction, like the immediate previous RGGI auction, produced record prices for reliable hydrocarbon-based generation, prompting Dominion to seek a method of charging customers more for that, too. 

— SDH